Published: 20th June 2025
As we reach the mid-point of 2025, the UK construction industry is showing signs of cautious resilience. While monthly output has ticked upward and longer-term forecasts are increasingly upbeat, persistent cost pressures and patchy performance across sectors continue to weigh on sentiment. At Leading Edge, we’ve reviewed the latest data and forecasts to help make sense of where the market stands — and where it’s heading next.
Construction Output: A Second Month of Growth
The latest ONS figures show that construction output increased by 1.9% in April, following a 0.5% rise in March. The growth was driven largely by a 2.5% rise in new work, with the strongest gains in infrastructure and private housing. Repair and maintenance activity rose by 0.8%.
Despite this two-month recovery, output over the quarter remains flat. Businesses continue to report long lead times and a slow return of client confidence, especially in commercial and public sectors.
PMI Shows Slowdown in Activity
The S&P Global UK Construction PMI for May 2025 came in at 47.8, a slight recovery from 44.6 in April — but still below the neutral 50 mark, signalling continued contraction. New orders are declining more slowly than before, but business optimism remains subdued.
S&P Global cites ongoing cost inflation and tight margins as key concerns, alongside delays in procurement decisions. However, some firms expect conditions to improve later in the year, supported by expected interest rate cuts and the pipeline of infrastructure work.
Housing: A Slow but Steady Uplift
The latest Glenigan Construction Industry Forecast 2025–2027 points to a long-anticipated rebound in private housing, forecasting 18% growth in housebuilding by 2027. Modest gains of 3% are expected in 2025, fuelled by improved mortgage availability and renewed developer activity.
This cautiously optimistic view is echoed in Research and Markets forecasts, which project a 5.3% CAGR for the UK residential sector through to 2034 — although affordability remains a barrier for many buyers.
Roofing Sector Under Strain
According to the NFRC Spring 2025 Report, roofing contractors are facing reduced workloads and new enquiries, with just 36% of firms reporting growth — down from 48% in late 2024.
Key findings:
- Labour costs are up for 79% of firms; 86% report higher material costs
- Only 33% reported an increase in new enquiries
- London, the South, and the North East are seeing the steepest declines
- Late payments remain widespread, with 1 in 3 firms paid late
- 47% say it’s harder to hire skilled workers than a year ago
Despite challenges, nearly half expect workloads to rise over the next 12 months — but confidence remains fragile, especially in public non-residential work.
Infrastructure and Commercial: Regional Bright Spots
The outlook for infrastructure remains relatively upbeat. The Construction Leadership Council notes that investment in road, rail, and energy continues to underpin new work. Meanwhile, Glenigan’s forecast sees 24% construction growth between 2025 and 2027, with double-digit expansion expected from 2026 onwards.
Commercial activity is less consistent. While high-spec refurbishments and logistics projects are progressing in some regions, office and retail demand remain sluggish, particularly outside of major city centres.
Final Thoughts from Leading Edge
The latest data offers a nuanced picture: encouraging output growth and long-term recovery forecasts, but tempered by weak sentiment, inflation, and regional disparity. Roofing and public non-residential sectors are clearly under pressure, while infrastructure continues to lead the way in new work.
At Leading Edge, we help clients interpret market shifts with confidence — whether you’re launching new products, exploring new sectors, or monitoring competitor performance. Get in touch if you’d like to discuss how we can support your plans for the second half of 2025.
Sources: ONS, S&P Global, Glenigan, NFRC, RICS, CLC, Research and Markets
Written by the Leading Edge team – 20th June 2025
